Trade between the US and China, in nine charts

Global Business

In this July 8, 2014 photo, a worker walks through an idle section of a steel plant in Danyang city in eastern China’s Jiangsu province. Chinese exports and imports contracted in August 2015 in the latest sign of weakness for the world’s second-biggest economy. (Chinatopix Via AP)

Published September 25, 2015 at 4:49 PM Updated September 25, 2015 at 5:08 PM

Over the last 25 years, the economies of the U.S. and China have become increasingly reliant on one another. The following nine charts help explain the economic relationship between the two nations and how it’s changed.

Note: All the charts are interactive. Tap the series at the bottom of each chart to isolate.

Imports and Exports

China and the U.S. have become top trade partners. In 2014, China was second only to Canada in terms of total trade to the United States.

The U.S. has imported more goods annually from China than any other country since 2007. China is also a top exporter of goods for the U.S.

“Trade with the U.S. is massively important, and especially now given slowdown in growth in China,” said Dan McClory, a managing director at Burnham Securities. “It’s top of the priorities so to speak.”

As China transitions to a consumer spending and services- based economy, some Chinese firms have found it’s become more efficient and cheaper to move manufacturing offshore — including to the U.S.

In 1990, China was the eighth top importer to the U.S., accounting for only 3.1 percent. (The lion’s share came from Canada and Japan.)

Over the past fifteen years, China’s trade with the world grew rapidly when exports and imports increased.

“The Chinese trading relationship has got to be in the top two or three in every nation in the planet. It can’t not be,” said Dan McClory, Managing Director with Banking at Burnham Securities.

Much of that has to do with the continued growth China’s experienced, but also because of “the encouragement China’s government is giving businesses and investors to go outside of China to invest.”

Balance of Trade
The balance of trade has long been in China’s favor: The U.S. consistently imports more goods from China than it exports. In 2014, the U.S. had a negative trade balance with China totaling $202 billion.

GDP

As China’s global trade has increased, so has its gross domestic product. GDP is one of the broadest measures of an economy’s health: An increasing GDP generally coincides with higher incomes, infrastructure investment, and a host of other positive outcomes.

China’s GDP has quadrupled over the last decade, from $2.27 trillion in 2005 to $10.36 trillion in 2014. In comparison, U.S. GDP increased by about a third — from $13.09 trillion to $17.42 trillion — over the same time period.

China’s GDP has also become a larger share of the global economy. In 1990, China’s GDP made up about 1.9 percent of the world’s total. In 2014, it was more than 13 percent.

Foreign Direct Investment

GLOBALLY
In 2014, China overtook the U.S. as the top country for foreign direct investment or FDI. FDI, which measures how much companies or governments of one region or country invest in a companies of another, can also be used as a measure of the recipient country’s growth prospects. The U.S. had previously been number one in the world for FDI since 2006.

“China is now transitioning to a consumer-led economy, so FDI into China is undoubtedly built around the Chinese consumer,” said Dan McClory, Managing Director with Banking at Burnham Securities. “The world understands the strength of the China consumer. And this all bodes well for China.”

FROM CHINA
In 2013, 4.4 percent of Chinese mainland overseas direct investment went to the U.S. — the third highest, after Hong Kong SAR (71 percent) and the Cayman Islands (10.5 percent), according to China’s National Bureau of Statistics. Since 2000, Chinese companies and the government have substantially increased foreign direct investment to U.S.

So far in 2015, Chinese investors have invested $60.9 billion in nearly 4,500 overseas enterprises in 150 countries and regions, according to the Chinese government.

INTO CHINA
Nine countries and the Taiwan region account for 94 percent of foreign direct investment into Chinese mainland from January to July 2015, according to the China’s Ministry of Commerce. The vast majority comes from Hong Kong. So far this year, U.S. entities have invested $1.28 billion in China.